Despite the daily government announcements and assurances that help is there for the taking during the Coronavirus period, many businesses are still worrying about cashflow and business continuity. Although the government has announced several financial measures to help businesses manage the impact of COVID-19, many of you have found that those measures are tricky to navigate and it’s taking longer to access cash than promised. While you’re waiting to receive support we feel it’s imperative that you go back to basics and consider whether there are any cash incentives you might be missing out on or could accelerate to get cash quicker?
The R&D tax credits scheme continues to offer benefits in exactly the same way as it did before COVID-19, nothing has changed based on our clients’ experience. HMRC are working wonders to ensure that they keep to the 28 day processing time and over the last few weeks we have been inundated by businesses wanting to accelerate their R&D claims to improve cashflow.
To help you tackle financial difficulties in an uncertain market, we explain below how R&D tax credits can generate a lifesaving injection of cash at just the right time, and what you can do to ensure you receive timely payout of your tax credits.
Q: We have applied for coronavirus job furlough scheme – why should I consider R&D tax credits for cashflow?
Thankfully the furlough scheme has been extended to October, but once the country starts to emerge from lockdown this support will be turned off. At the same time it’s likely that business in the built environment sector will be waiting for delayed projects to restart. This means revenues will recover slowly as life gets back to normal and therefore your business will be looking at a cashflow crunch in the late summer, or early autumn as your staff re-join the payroll.
This is where your R&D tax credits claim can step in. If you start preparing your claim now, and can submit the numbers over the next 6 weeks, this effort will generate a positive cashflow boost at exactly the right time to keep your business ticking over.
Q: I am looking at CBILS. Will this impact my future R&D claims?
Government advice is currently limited, however the fact that this scheme is state aid means that it’s likely to impact your claims. If you’re considering taking out government support, you’ll need to carefully review the effect this may have on your future R&D claims and cashflow. Getting this wrong can mean delays to your cash and significantly reduce benefit claim. Speak to our tax advisers about this issue as the rules are complex.
Q: Many of our projects are on hold due to COVID-19 and our staff are available. Should we redeploy some of our staff to prepare a claim for R&D tax credits?
Our clients’ experience shows that R&D tax credit claims currently continue to be approved in the same time frames as before the Coronavirus lockdown. This is great news if you’re looking for a reliable source of cash injection for your businesses. If you have staff available preparing an R&D claim can be a great use of time that could keep them engaged and motivated during the shutdown. However for a first time claimant negotiating the R&D tax credit scheme can be daunting. Our R&D team can help train up your staff to understand how to prepare a claim and provide tailored assistance to ensure you successfully submit the claim on time.
Q: How long does it take to get cashback and when would that be?
There are two timescales to keep in mind.
Firstly, how long will your claim take to prepare? The latest claim we completed went from kick-off to submission in ten days. Bear in mind that HMRC still require the same level of documentation to agree your claim.
Secondly, as mentioned above, HMRC’s payout time of approved R&D tax credits is within 28 working days on most claims, if you provide the correct information. Therefore documentation needs to be done right to avoid hold-up, which is not a delay you can afford. It’s critical in this case that the claim is submitted via your tax agent to comply with HMRC’s tax requirements.
Taking these two tasks together we would expect that the cash from an R&D claim could be in your bank account in 8 to 10 weeks. Therefore, if you need cash support during the summer there is no time to lose in kicking off the claim process.
To help ensure you receive tax credit payout in a timely fashion, we’ve put together a helpful interactive guide which will reveal how likely your R&D claim is to be queried by HMRC. Complete ten quick questions and find out how to avoid any delays to your claim. This instant assessment is based on our R&D experts’ years of experience. Click here to start.
Q: How much cash can I get?
Construction sector SMEs in the south of England claimed up to £68,000 cash back on average. For loss making businesses this can be up to 33% of claimable costs, which can be enough to retain your key staff in the medium term. Often our expert team can identify double your qualifying spend.
Q: We are not eligible for R&D tax credits – is there anything we can do?
You may be unaware that your business undertakes eligible projects, or you may overlook additional qualifying costs. These could be costly mistakes in the current uncertain financial environment. Contact our experts who will be happy to explain what you can do.
R&D tax credits are a great way to get much needed cash into your business. But if you get the claim wrong you can miss out on cash or find your repayment is significantly delayed. Our team of R&D specialists have over fifteen years of experience in preparing R&D claims and guide you successfully through this process.
Looking for more information?
If you would like help with your claim, or have questions about the scheme, get in touch below through the enquiry form.